Legislature(2015 - 2016)SENATE FINANCE 532
04/05/2016 05:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB126 | |
| SB154 | |
| SCR4 | |
| SB69 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 126 | TELECONFERENCED | |
| + | SB 154 | TELECONFERENCED | |
| + | SCR 4 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 69 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 5, 2016
5:04 p.m.
5:04:20 PM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 5:04 p.m.
MEMBERS PRESENT
Senator Anna MacKinnon, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
Senator Peter Micciche, Vice-Chair
ALSO PRESENT
Senator Mia Costello, Sponsor; Weston Eiler, Staff, Senator
Mia Costello; Senator Bill Stoltze, Sponsor; Stuart
Krueger, Staff, Representative Shelley Hughes; Erin Shine,
Staff, Senator Anna MacKinnon; Janey Hovenden, Director,
Division of Corporations, Business and Professional
Licensing, Department of Commerce, Community and Economic
Development.
PRESENT VIA TELECONFERENCE
Renee Wardlaw, Division of Banking and Securities,
Assistant Attorney General, Anchorage; Thomas Daly, Owner,
HiSpeed Gear, Kenai; Bob Scanlon, Blood Bank of Alaska,
Anchorage; Tim Benintendi, Secretary, Blood Bank of Alaska,
Anchorage; Michael Schechter, Attorney General's Office,
Anchorage; Mike Coons, National Legislative Director,
Citizen Initiatives, Palmer.
SUMMARY
SB 69 BD OF CHIROPRACTIC EXAMINERS; PRACTICE
CSSB 69 was REPORTED out of committee with "no
recommendation" and with one new fiscal impact
note from the Senate Finance Committee for
Department of Commerce, Community and Economic
Development.
SB 126 SMALL SECURITY OFFERINGS
SB 126 was HEARD and HELD in committee for
further consideration.
SB 154 BLOOD BANK OF ALASKA LICENSE PLATES
SB 154 was HEARD and HELD in committee for
further consideration.
SCR 4 US COUNTERMAND CONVENTION DELEGATES
SCR 4 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 126
"An Act establishing an exemption for the offering and
sale of certain securities."
5:05:42 PM
SENATOR MIA COSTELLO, SPONSOR, explained the legislation:
Senate Bill 126, the Innovating Alaska Act, helps
Alaskans start and invest in local businesses by
enacting a new finance mechanism in state law.
Crowdinvesting (sometimes known as "equity
crowdfunding") is a new concept with a simple premise.
Instead of receiving large investments from a few
traditional investors, Alaskans starting a business
receive small investments from a potentially a large
group of investors. The approach lets broad groups of
people invest in small businesses in return for equity
ownership. This makes it easier for business start-ups
to get capital to grow, and allows average Alaskans to
invest in businesses being started in their
communities.
The federal Jumpstart Our Business Start-Ups (JOBS)
Act of 2012 paved the way for this paradigm shift in
business creation. It refines some of the more onerous
regulations that have historically made it difficult
for average Americans to directly invest in private
companies. Since then over 12 states have enacted
intra-state crowdinvesting laws.
Crowdinvesting usually works through young companies
selling equity shares, often through an on line
portal, to a wide group of investors. Senate Bill 126
would regulate the sale of these types of securities
separately from the Alaska Securities Act (AS
45.55.010) and adds several safeguards to protect
investors.
Under Senate Bill 126, businesses seeking to raise
capital through crowdfunding would apply to the Alaska
Division of Banking & Securities and hold investor
funds in escrow in an Alaskan bank. Investments made
through crowdinvesting are limited to $7,500 for
investors and $1,000,000 for businesses raising
capital. Both the investor and business owner must be
Alaska residents.
Business start-ups are key to growing our state's
economy. Enacting crowdinvesting through Senate Bill
126 is an innovative way to give entrepreneurs easier
access to capital, and help Alaskans invest in local
businesses.
5:09:12 PM
WESTON EILER, STAFF, SENATOR MIA COSTELLO, presented the
Sectional Analysis (copy on file):
Section 1. Amends the Alaska Securities Act (AS 45.55)
by adding a new section. Sec. 45.55.l75(a) exempts the
sale of securities through crowdinvesting between
Alaska businesses and residents from the requirements
of AS 45.55.070 - 45.55.120 (registration of
securities) and AS 45.55.150 (sales and advertising
literature). Sets new limitations and requirements on
the offer and sale of this type of securities
including:
(1) issuer's organizational entity must be for-
profit, and located and licensed in Alaska,
(2) securities under this section may only be
sold to Alaska residents and must be in
compliance with federal law's (Securities Act of
1933) residency requirements for interstate sale
of securities,
(3) sale of securities under this section by a
for-profit entity are capped at $1,000,000,
(4) investments by an individual in a business
under this exemption are capped at $7,500 during
a 12-month period, (5) issuer of securities under
this section must have a reasonable belief that
the purchase of securities is for investment not
resale,
(6) commissions for persons participating in the
offer or sale for the issuer are prohibited,
(7) requires escrow account deposit of investor
funds until the minimum target for the issuer is
met,
(8) notice to the department about solicitation
of sale of securities under this section,
(9) restrictions on who may issue securities
under this section,
(10) disclosures to investors about this type of
securities exemption in statute and restriction
on resale,
(11) requires signed investor acknowledgement of
investment risk,
(12) exemption for sale of this type of
securities may not be used along with other
exemptions to the Alaska Securities Act,
(13) sale of this type of securities are covered
by anti-fraud statutes and other provisions under
AS 45.55.010 - 45.55.028.
Sec. 45.55.175(b). Allows the department to deny or
revoke an exemption under this section if the sale
would lead to a fraud on purchasers.
Sec. 45.55.l75(c). Requires the Department of
Commerce, Community, & Economic Development to charge
an applicant a filing fee for an exemption under this
section.
Sec. 45.55.l75(d). Prohibits an issuer from using the
exemption under this section if the entity or its
officers are subject to a disqualifier under the Dodd-
Frank Wall Street Reform and Consumer Protection Act -
U.S.C. 78c(a)(39).
Sec. 45.55.175(e). Defines terms for the section.
Section 2. Adds a sec. 45.55.175 exempting
transactions under this bill to the list of
transactions that are exempt from basic security
registration requirements under AS 45.55.070 and AS
45.55.075 (the section addressing federal covered
securities).
5:13:47 PM
Senator Dunleavy wondered if one could currently micro
invest under different rules. Mr. Eiler replied in the
affirmative.
Senator Dunleavy surmised that the bill was related to a
business that wanted to go public. Mr. Eiler explained that
the legislation targeted startup companies. He remarked
that it was a mechanism for large groups of Alaskans with a
small amount of money could invest in private companies.
Senator Dunleavy stated that current law already allowed
for the partnership. Mr. Eiler replied that the bill
offered another tool for a general solicitation without a
broker dealer.
Senator Bishop looked at Section 13, and queried the
recourse. Mr. Eiler responded that the language reflected
that nothing was exempt from fraud statutes.
Senator Bishop surmised that the investor had a vehicle to
recover some funds. Mr. Eiler replied in the affirmative.
5:18:07 PM
Senator Olson queried the type of people the legislation
was intending to invest. Mr. Eiler responded that there
were many opportunities, especially in rural areas. The
bill would remove some hurdles, to make is easy for
Alaskans to invest in small companies such as
microbreweries and arts businesses.
Senator Olson queried any protections for the elderly. Mr.
Eiler replied that he had conversations with the Division
of Banking and Security. He stated that the division had
worked to monitor that problem.
Senator Bishop spoke in support of the legislation.
5:22:25 PM
RENEE WARDLAW, DIVISION OF BANKING AND SECURITIES,
ASSISTANT ATTORNEY GENERAL, ANCHORAGE (via teleconference),
introduced herself.
Co-Chair MacKinnon queried feedback on the legislation. Mr.
Wardlaw replied that the division was neutral on the bill.
Co-Chair MacKinnon wondered whether the public was
protected under the legislation. Ms. Wardlaw replied in the
affirmative.
Co-Chair MacKinnon queried any exemption from the Alaska
Security Act. Ms. Wardlaw replied in the negative.
5:24:50 PM
THOMAS DALY, OWNER, HISPEED GEAR, KENAI (via
teleconference), testified in support of the legislation.
He felt that the bill helped to diversify the state's
economy. He wanted to empower small businesses. He did not
feel that the legislature was properly diversifying the
state. He remarked that the bill would engage Alaskans in
businesses. He shared his phone number: 907-283-9136.
Co-Chair MacKinnon CLOSED public testimony.
SB 126 was HEARD and HELD in committee for further
consideration.
5:27:33 PM
AT EASE
5:28:18 PM
RECONVENED
SENATE BILL NO. 154
"An Act relating to special registration plates
commemorating the Blood Bank of Alaska."
5:28:41 PM
SENATOR BILL STOLTZE, SPONSOR, explained the legislation.
He stated that this was the first license plate bill he had
offered. He felt that the bill was straight forward, and
provided a commemorative license plate for the state. He
stated that there was one change in the bill, which made
the mechanism to provide the proceeds to the nonprofit.
Senator Hoffman wondered if the bill was a "bloody good
bill." Senator Stoltze replied that it was a "darn good
bill."
5:31:18 PM
BOB SCANLON, BLOOD BANK OF ALASKA, ANCHORAGE (via
teleconference), introduced himself.
Co-Chair MacKinnon wondered if Mr. Scanlan was in support
of the bill. Mr. Scanlan replied in the affirmative.
5:32:29 PM
TIM BENINTENDI, SECRETARY, BLOOD BANK OF ALASKA, ANCHORAGE
(via teleconference), spoke in support of the legislation.
Co-Chair MacKinnon CLOSED public testimony
SB 154 was HEARD and HELD in committee for further
consideration.
SENATE CONCURRENT RESOLUTION NO. 4
Relating to the duties of delegates selected by the
legislature to attend a convention of the states
called under art. V, Constitution of the United
States, to consider a countermand amendment to the
Constitution of the United States; establishing as a
joint committee of the legislature the Delegate
Credential Committee and relating to the duties of the
committee; providing for an oath for delegates and
alternates to a countermand amendment convention;
providing for a chair and assistant chair of the
state's countermand amendment delegation; providing
for the duties of the chair and assistant chair;
providing instructions for the selection of a
convention president; and providing specific language
for the countermand amendment on which the state's
convention delegates are authorized by the legislature
to vote to approve.
5:34:19 PM
SENATOR BILL STOLTZE, SPONSOR, explained the resolution:
SJR 15 and SCR 4 seek to restore the balance of power
between the states and federal government. The pair of
resolutions would strengthen state sovereignty by
providing states with veto (countermand) power over
federal decisions deemed not in their best interest by
establishing an amendment to the U.S. Constitution.
These two resolutions in tandem are intended to start
the process of amending the US Constitution via the
powers granted in Article V.
SJR 15 (The Application) provides Alaska's call to
Congress for a clearly defined, single-issue
Countermand Amendment Convention. The Countermand
Amendment to the United States Constitution, when
ratified, will allow states to propose Countermand
Initiatives, which upon approval by three-fifths of
the state legislatures, will repeal any federal
statute, executive order, judicial decision, or
regulatory decision listed in the Initiative.
SCR 4 (The Delegate Resolution) enables the state
legislature to institute parameters for the
convention, ensuring that a "runaway convention" is
not possible, and provides for a productive, safe and
timely process. The Delegate Resolution establishes a
Credential Committee for selection of delegates to the
convention, and outlines the duties of the delegates.
SCR 4 also includes the language of the proposed
Countermand Amendment to the U.S. Constitution.
These two resolutions do not pertain to a conservative
versus liberal agenda; this is a state versus federal
issue. Passage of these resolutions is an actionable
step the Legislature can take toward restoration of
the proper balance of state and federal powers.
5:36:07 PM
STUART KRUEGER, STAFF, REPRESENTATIVE SHELLEY HUGHES,
explained the Sectional Analysis (copy on file):
Resolve 1
Pg 2 ln 26: Authorizes the legislature to appoint and
summon delegates for the amendment convention.
Resolve 2
Pg 2, ln 29: Gives the legislature authority to decide
the qualifications and total number of delegates to
send to the convention.
Resolve 3
Pg 3, ln 1: Gives the legislature the ability to add
or remove delegates and
Resolve 4
Pg. 3, Ln 6: Provides parameters and instructions for
state's delegates at the convention.
Prohibits delegates from voting for any other
amendments, outside of the countermand amendment,
at the convention.
Resolve 5
Pg 3, ln 13: Reserves the countermand amendment as the
only amendment for consideration for ratification by
the legislatures.
Resolve 6
Pg 3, ln 15
Upon a call for convention by 34 states, this resolve
allows for establishing of the Delegate Credential
Committee within the Alaska Legislature, with duties
listed in section A.
Speaker of the House shall appoint three members from
the House, one being a minority caucus member. The
President of the Senate shall appoint three members of
the Senate, one being a minority caucus member.
Resolve 7
Pg 3, ln 24
Provides for replacement procedure for members of the
Delegate Credential Committee.
Resolve 8
Allows for selection of co-chairs of the Delegate
One co-chair from the House, one from
Pg 3, ln 26
Credential Committee
the Senate. Along with staff
assignments for committee support.
Resolve 9
Pg 3, ln 30
Establishes when Delegate Credential Committee can
meet.
Resolve 10
Pg 4, ln 1
Acknowledges that the Delegate Credential Committee
will continue until the first day of the Thirtieth
Alaska State Legislature.
Resolve 11
Pg 4, ln 3
Requests that the Delegate Credential Committee be
considered for reestablishment during the Thirtieth
Alaska Legislature.
Resolve 12
Pg 4, ln 6
Provides for removal and replacement procedure for
members of the Delegate Credential Committee
Members are removed or replaced by the presiding
officer that appointed them.
Resolve 13
Section A.
Pg 4, ln 17
Provides the duties of the Delegate Credential
Committee.
Majority vote on decisions, official facilitator for
the legislature, appointment of delegates, provide a
committee report on selected delegates, appointing
chair and assistant chair of delegation, properly vet
and confirm delegates, issue convention passes to
delegates, notify legislature of financial needs at
the convention, administer oaths to the delegates,
alternates, chair and assistant chair, monitor
activities of Alaska's delegation, submit quarterly
reports to the legislature on events, progress, and
recommendations for the convention, authority to
recommend removal of a delegate or alternate for
approval by the legislature.
Resolve 13
Section B
Pg 6, ln 11
Provides for the duties of the chair of Alaska's state
delegation and the president of the convention,
Chair is responsible for communicating with other
state delegations to open convention for business;
identifying other legislatures that have approved a
delegate resolution; build consensus with at least 26
state delegations to require that each state
delegation at the convention has only one vote;
require a simple majority vote at all roll calls;
nominate convention officials; require a quorum of 26
state to conduct business; build a consensus of at
least 26 states to support sending the countermand
amendment for ratification; work to conclude
convention in 21 days, or no longer than 180 days;
nominate a candidate for convention president from
Alaska's delegation, or work to elect a president
Resolve 13
Section B, J
Pg 7, ln 31
Under duties of the Alaska delegation chair, includes
supporting the following duties of the convention
president.
Convention president duties include: securing a vote
for this delegate resolution to be the rules of order
at the convention; focus on the purpose of sending the
countermand amendment for ratification by the states;
request security measures as needed; oversee
installment of officers at the convention; establish
convention agenda; provide equal time for floor
discussion for all states; to prohibit introduction of
any subject other than the countermand amendment; call
for a vote for sending countermand amendment to the
states; report to 50 state legislatures, and the media
on convention progress; provide formal requests, when
needed, to states for money that will be needed to
carry on business; oppose any effort to delay or
modify the countermand amendment vote; oppose any
effort by states to offer amendments other than the
countermand amendment
Resolve 13
Section C
Pg 10, ln 3
Addresses duties and responsibilities of convention
delegates.
Delegate duties include: comply with directives in
this resolution; follow instructions of the chair and
assistant chair of Alaska's delegation; be present to
vote at all roll calls; attend all assigned sessions
at the convention; report to the delegation chair the
number of states in favor of the countermand
amendment; recommend strategies to help join 26 states
in favor of the countermand amendment
Resolve 13
Section D
Pg 11, Ln 1
Addresses duties and responsibilities of convention
delegate alternates.
Resolve 13
Section E
Pg 11, Ln 8
Provides the text for the countermand amendment to the
United States Constitution.
5:40:41 PM
MICHAEL SCHECHTER, ATTORNEY GENERAL'S OFFICE, ANCHORAGE
(via teleconference), stated that he was available for
questions.
Co-Chair MacKinnon queried any technical errors in the
resolution. Mr. Schechter replied that the there was an
issue related to how the constitutional convention process
would work. The process had never been used in the United
States.
Senator Stoltze stated that he hoped that there would be a
point when the questions would be addressed.
5:44:18 PM
MIKE COONS, NATIONAL LEGISLATIVE DIRECTOR, CITIZEN
INITIATIVES, PALMER (via teleconference), testified in
support of the legislation.
Co-Chair MacKinnon CLOSED public testimony.
SCR 4 was HEARD and HELD in committee for further
consideration.
5:49:23 PM
AT EASE
5:49:57 PM
RECONVENED
SENATE BILL NO. 69
"An Act relating to the Board of Chiropractic
Examiners and the practice of chiropractic."
5:50:02 PM
Co-Chair Kelly MOVED to ADOPT the committee substitute for
SB 69, 29-LS0704\S (Bruce, 4/4/16).
Co-Chair MacKinnon OBJECTED for DISCUSSION.
ERIN SHINE, STAFF, SENATOR ANNA MACKINNON, explained the
committee substitute.
Co-Chair MacKinnon WITHDREW the OBJECTION. There being NO
OBJECTION, the proposed committee substitute was adopted.
5:51:59 PM
AT EASE
5:52:39 PM
RECONVENED
5:52:50 PM
SENATOR BILL STOLTZE, SPONSOR, expressed gratitude for
fixing some issues in the bill.
5:53:44 PM
JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, introduced
herself. She stated that there was a previous higher fiscal
note, so the current version would reduce the fiscal note
to $2,500 for a regulation project.
Co-Chair MacKinnon queried the location of the new fiscal
note. Ms. Hovenden replied that her staff did not draft a
fiscal note until the committee substitute was complete.
5:54:55 PM
AT EASE
5:55:23 PM
RECONVENED
5:55:26 PM
Co-Chair MacKinnon wanted to ensure that there would only
be an FY 17 one-time expenditure for regulation adoption,
with the out years at zero. Ms. Hovenden agreed.
Senator Olson wondered if the Alaska Board of Medicine was
in support of the bill.
Co-Chair MacKinnon wondered if the Alaska Board of Medicine
was in support of the bill. Senator Stoltze replied that
there were discussions with the medical community, and they
did not have a position on the bill.
Co-Chair MacKinnon queried a companion bill. Senator
Stoltze replied in the negative.
Co-Chair MacKinnon stated that the bill would go to the
other body for consideration.
Senator Olson wondered if conversations were with the
Medical Association or the Medical Board. Senator Stoltze
replied that there was only a conversation with a
representative from the Medical Association.
Co-Chair Kelly MOVED to REPORT CSSB 69(FIN) out of
committee with individual recommendations and attached
fiscal note. There being NO OBJECTION, it was so ordered.
Senator Dunleavy declared his conflict of interest.
CSSB 69 was REPORTED out of committee with "no
recommendation" and with one new fiscal impact note from
the Senate Finance Committee for Department of Commerce,
Community and Economic Development.
5:59:40 PM
AT EASE
6:01:31 PM
RECONVENED
Co-Chair MacKinnon discussed the following day's agenda.
ADJOURNMENT
6:01:45 PM
The meeting was adjourned at 6:01 p.m.